When Do Essential Health Benefits Start?
Under the Affordable Care
Act Essential Benefits
are offered on all qualifying plans starting January 1st, 2014.
Who Has Access to Essential Health Benefits?
All plans sold in individual and small group markets, including
plans sold on and off the Health Insurance Marketplace, and
Government healthcare plans like Medicaid and Medicare all
include at least 10 Essential Benefits. Grandfathered plans from
before the law was enacted in March 23, 2010, plans that will be
discontinued in 2015 (2014 in some States), self-funded ASO (administrative
services organization) plans, and large group plans
don't have to offer Essential Benefits.
• In older plans, not offering these benefits can translate to lower
premium costs (because they offer less benefits)
• Large group plans almost all already offer essential health
benefits or their equivalent.
• All new Medicaid and Medicare plans must offer essential health
benefits starting in 2014.
• Specific health care benefits may vary by state. Even within the
same state, there can be small differences between health insurance
What Do Essential Benefits Cost?
Some Essential Benefits include no out-of-pocket costs (no cost
sharing) and all Essential Benefits offer no annual or lifetime
limits and have minimum cost sharing limits.
No Cost Sharing on Some Preventive Services
Essential Health Benefits include annual wellness visits and many
types of preventive services including immunizations and screenings
at no out of pocket costs. The Affordable Care Act has a major focus
on wellness and prevention to help increase early detection and
catch sickness before it starts increasing wellness and decreasing
the need for costly treatments. (note: For preventive care to have
no out-of-pocket expense it must be delivered by a network
No Annual Limits on Essential Health Benefits
There are no dollar limits on Essential Benefits. Before annual and
lifetime limits over 60% of bankruptcies in the US were medical
bankruptcies. Eliminating dollar limits on essential care ensures
that patients won't have to stop treatment and/or go broke when they
reach their dollar limit.
A Minimum Actuarial Value on All Coverage
There is a cap on out-of-pocket costs on all plans that cover
Essential Benefits. Plans offering Essential Benefits must cover at
least 60% of covered out-of-pocket expenses and must have reasonable
out-of-pocket maximums (in other words a plan offering essential
benefits must be at least the equivalent to a "bronze" plan sold on
Plans must provide one of four levels of benefits, named "Bronze",
"Silver", "Gold" and Platinum. Each designation represents an
"actuarial value", which is calculated as the average % of total
health costs they cover for a defined population). Bronze plans
cover 60% on average, "Silver" 70%, "Gold" 80% and "Platinum" 90% of
costs on average. For most individuals though a plan will pay far
less than these percentages: this is because a high proportion of
health care costs are incurred by a small number of very sick
people, and once they reach the out-of-pocket maximums, the plan
pays 100% of their extra costs.
In general, the higher the metallic level (i.e. Gold and Platinum),
the more the plan will pay towards your healthcare expenses, but the
higher your monthly premiums will be. Higher tier plans may also
offer additional benefits that are not considered "essential".
Out-of-pocket Maximum (Limit)
Your out-of-pocket maximum (limit) is the most you pay during a
policy period (usually a year) before your health insurance or plan
begins to pay 100% of the allowed amount. This limit never includes
your premium, balance-billed charges, or health care your health
insurance or plan doesn’t cover. All cost sharing for Essential
Benefits counts towards your out-of-pocket limit.
Please note that some plans don’t count your copayments,
deductibles, coinsurance payments, out-of-network payments, or other
expenses toward this limit. In Medicaid and CHIP, the limit includes
premiums. The maximum out-of-pocket costs for any Marketplace plan
for 2014 are $6,350 for an individual plan and $12,700 for a family
Why Do I Need Essential Health Benefits?
In the past many plans offered sub-par coverage as a way to keep
premium costs down. This would seem attractive until one actually
needed care. This led to many cases of Americans paying for plans
for years and then finding that they did not have access to the care
they needed or hit a dollar limit and were denied treatment when
they needed it most. Today all plans cover essential health benefits
to ensure that we all get the care we need.
Why Do I Have to Pay For Benefits I Don't Need?
While most Essential benefits could be used by anyone, many benefits
like Maternity services are included on all plans. One could argue a
single male, who never has children, won't benefit from this
directly (although it's easy to argue countless ways he benefits
indirectly notably his mother, sisters, relatives, community, etc),
leading to the obvious question, "why do I have to pay for something
I don't need?"
In employment based group health insurance policies, all employees
of a company pay the same premium, regardless of their individual
health needs. So the premium younger workers pay helps subsidize the
higher health costs of older employees. Although this means higher
premiums for young employees, when employees get older they will
benefit from this arrangement. Similarly male workers will pay
premiums that include costs of maternity care and breast cancer,
even though they are unlikely to need either. In insurance terms,
all members of the group are considered as a "risk pool".
The Affordable Care Act creates a "single risk pool" in the
individual and small group markets that mirrors the "risk pools"
employees of large firms have enjoyed in the past. This means that
regardless of what care you need, or may need, we all share the cost
and the risk. This allows insurance companies to cover men at the
same rate as women and sick people at the same rate as healthy
people. Without a single risk pool insurance would still be
unaffordable for many and preexisting conditions would not be
covered. Since there is a single risk pool that splits the costs of
Essential Benefits all Essential Benefits are offered to all
How Do I Know if My Plan Covers Essential Health Benefits?
If you enrolled in an individual or small group plan after 2014 you
most likely have access to Essential Health Benefits that follow the
rules of the ACA. The same is true for Medicare and Medicaid.
The ACA contains exceptions for "grandfathered" plans, . These are
plans that existed prior to the Act - March 23, 2010, provided that
they have not changed significantly. Unfortunately most insurance
plans change "significantly" almost every year, so few plans are "grandfathered".There
are also special exceptions for self-insured groups, and student
health plans. In addition both large employer group
plans, and now individual plans, have been allowed to continue until
Exceptions and Limits on Essential Health Benefits
There are some exceptions and limits on Essential Benefits, they
• Insurance companies can still put a yearly dollar limit and a
lifetime dollar limit on spending for health care services that are
not considered essential health benefits.
• Some health insurance plans may have received a temporary waiver
from the rules on yearly dollar limits. Yearly limit waivers end
with plan or policy years beginning in 2015 (2014 in some States).
• All non-grandfathered health plan must limit the total
out-of-pocket costs enrollees pay for in-network.
• Health plans can still however set limits on the number of times
you can receive a certain treatment.
• Large Group markets and self funded (ASOs) don't need to offer
Essential Benefits Facts
Here are some quick facts about Essential Health Benefits and the
Affordable Care Act (ObamaCare):
• Cost sharing on Essential Health Benefits count towards your
• Aside from the Essential Health Benefits, plans may offer a number
of additional benefits.
• Some plans may offer better cost sharing options on benefits
subject to out-of-pocket cost sharing. In general the more
"valuable" the metal, the higher the percentage of out-of-pocket
costs covered by your insurer.
• Essential Health Benefits include the most commonly used health
services like preventive services and annual wellness visits with no
• Essential Health Benefits include preventions and treatments you
need if you get sick. This includes ongoing treatment for common
serious sicknesses like cancer.
• There are no annual or lifetime limits on Essential Health
Benefits. Before the ACA over 60% of all bankruptcies in the US were
medical related, many due to the cost of treatment exceeding annual
and lifetime dollar limits.
• The annual cost to society of substance use disorders alone is
approximately $200 billion, yet only a fraction ($15 billion) is
spent on treatment. The inclusion of mental health and substance use
disorders services is projected to balance these numbers and reduce
• Instead Essential Benefits, large employers only have to offer
"Minimum Essential Coverage" without the act really defining what
this is. This has caused some companies to adopt "skinny plans" with
very limited coverage. There are no limits on out-of-pocket cost for
services not covered! See
Essential Benefits Myths
Here are some common myths about Essential Health Benefits and the
Affordable Care Act (ObamaCare):
• There are no
dollar limits on healthcare. Dollar
limits still apply to non-essential treatments, essential benefits
are covered at no dollar limits and must have reasonable
• All Essential
Benefits are "free". Only
some preventive services have no out-of-pocket expenses. Other
benefits may have reduced, or no, out-of-pocket expenses depending
on the plan. Even a "free" service still comes with the cost of your
monthly premium. See a list of all required "free" Preventive
• Abortions have to be provided on demand at public cost. False!
The ACA Sect 1303 explicitly prohibits abortion from coverage as an
"essential benefit" and confirms existing Federal and State
prohibitions on use of public funds for abortion services. Insurers
may voluntarily decide to include abortions in their plans: some
plans only cover abortion services only in cases of life
endangerment, rape, and incest. States who are providing their own
health insurance marketplaces, prohibit coverage of abortion
services. So far Arizona, Louisiana, Mississippi, Missouri, and
Tennessee have banned coverage of abortions. The bans in Louisiana
and Tennessee do not contain any exceptions. Missouri only allows
coverage where a woman’s life is endangered, Arizona has a life and
narrow health exception,and Mississippi allows coverage where a
woman’s life is endangered or the pregnancy is the result of rape or
incest. In addition – Idaho, Oklahoma, Kentucky, Missouri and North
Dakota already ban health insurance companies from covering abortion
except by optional rider. If an insurer offers abortion in cases
other than life endangerment, rape or incest, then it must separate
the cost of such coverage and charge a separate premium for such
• Paying for care
I don't need means higher premiums. This isn't
a myth as much as a misunderstanding of how the law works. In order
to make insurance affordable for all Americans a "single risk pool"
is created. Since the risk is shared by all insurers, premium prices
reflect not only the risk, but all benefits, rights, and protections
offered by the Affordable care Act. The only way to provide
affordable health insurance for the sick, is for the healthy to
share the cost: after all you might become sick and need that help
tomorrow, or next year, or in ten years time. This is the way
employer group plans work. However, unlike employer group plans,
marketplace plans for individuals allow a lower premiums for younger
members, while limiting the maximum premium paid by the elderly to
three times the premium for a young person. The only way to offer
specific care to specific people for specific prices, would be to
eliminate the ban on imposing annual and lifetime limits, the ban on
gender and health discrimination, and the ban on denying coverage
and treatment to people with preexisting conditions. As it stands
now many people will pay less than they did before the law due to
the aforementioned bans and subsidies, while many will pay more due
to the way the new system works. Regardless all Americans buying new
plans will have better benefits, rights, and protections on